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Notable trends:

  • Coffee prices ticked up +3.6% over the past week, but are down -35.6% on a year-over-year basis as global supply continues to outpace demand.  Low coffee prices will remain a strong tailwind for SBUX, DNKN, GMCR, KKD, THI and other coffee retailers in 4Q13 and throughout 2014.
  • Dairy costs have been volatile, but a favorable comparison in 4Q could support the outlook for CAKE, TXRH and others with exposure to dairy costs, if prices stay at or near current levels.
  • Corn and wheat prices continue to provide retailers, restaurants and consumers with lower food costs than a year ago.
  • Beef prices have been trending up YTD and should continue to pressure margins for BLMNTXRH, CMG, WEN and others with significant exposure.
  • Gasoline prices ticked up 40 bps over the past week, but are down -6% on a year-over-year basis and have provided consumers with some relief.  We will continue to monitor this trend, as any sustained increase or decrease in gas prices could have a significant impact on the direction of discretionary spending.

COMMODITY CHARTBOOK - chart1

 

 

Notable correlations:

  • Strong correlation to the USD over the past 30 days:
    • Milk +0.93
  • Strong negative correlation to the USD over the past 30 days:
    • Wheat -0.93
    • Gasoline Prices -0.92
    • Chicken Wings -0.89
    • Sugar -0.88
    • CRB Foodstuff Index -0.82
    • Coffee -0.76

 

COMMODITY CHARTBOOK - chart2

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COMMODITY CHARTBOOK - chart16

 

 

 

Howard Penney

Managing Director